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PPACA three R's programs: Insurers cry out

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Health insurers have had trouble with getting the Centers for Medicare & Medicaid Services (CMS) to help them prepare to participate in the new Patient Protection and Affordable Care Act (PPACA) risk-management programs.

The U.S. Government Accountability Office (GAO) has included a glimpse of insurers’ concerns about “three R’s” program implementation in a summary of results of interviews with representatives from 12 insurers.

The GAO conducted the investigation at the request of Sens. Lamar Alexander, R-Tenn., and Bob Corker, R-Tenn.

Drafters of PPACA created the three R’s programs in an effort to protect health insurers from some of the effects of new PPACA underwriting rules on claim risk, and to give insurers the confidence to keep premiums as low as possible. 

  • A temporary reinsurance program is supposed to use revenue from a fee imposed on all health insurers to help pay the bills of individual coverage holders who have catastrophic claims in 2014, 2015 or 2016.

  • A temporary risk corridors program is supposed to use cash from PPACA-compliant qualified health plans (QHP) that have good underwriting results in 2014, 2015 and 2016 to help QHP issuers that have poor underwriting results in those years.

  • A permanent risk-adjustment program is supposed to use cash from issuers of insured PPACA-compliant plans with relatively low-risk enrollees to help issuers of insured PPACA-compliant plans with relatively high-risk enrollees. 

Five of the 12 insurers that participated in the GAO investigation said they counted on the risk-adjustment program to work when they priced their 2014 coverage, and seven said they had counted on the risk corridors program to work. Ten said they had counted on the reinsurance program to work.

Now, most of the 12 insurers have concerns about how much reinsurance money will be available, and when any payments will come in.

See also: PPACA plan liquidation petition highlights

Most of the insurers also have concerns about risk corridors program funding. Two of the 12 issuers said an apparent funding shortfall in the risk corridors program “will have a material impact on their premium decisions for 2016.”

Some insurers said they also have serious concerns about how the Centers for Medicare & Medicaid Services (CMS), an arm of the U.S. Department of Health and Human Services (HHS), is overseeing day-to-day three R’s operations as well as about three R’s financing. 

One morning, CMS released software and told insurers they had to use the software to run risk-adjustment calculations the next morning.

That afternoon, CMS announced that it had found an error in the code and rescinded the code, an insurer told the GAO.

“The issuer said that this example illustrates how CMS was releasing software before conducting the necessary quality assurance checks and was correcting problems as it went,” John Dicken, a GAO director, writes in the three R’s program report.

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The same issuer said CMS released software that was missing 7,000 of the patient diagnostic codes that insurers need to do the risk-adjustment calculations.

Ten of the 12 insurers said getting technical help from CMS has been difficult.

Several issuers told the GAO that, from the fall of 2013 through the spring of 2014, during the first PPACA open enrollment period, “they received no guidance from CMS” about how to set up the External Data Gathering Environment (EDGE) servers they’re supposed to use to feed data into the reinsurance and risk-adjustment programs.

CMS has been holding regular conference calls and webinars for insurers, but CMS managers have had trouble answering all of the questions insurers submitted during those events, insurers told the GAO.

Two of the insurers told the GAO that CMS now seems to be answering questions more quickly, but “two other issuers told us that there were still unresolved requests related to data submission issues, even though the relevant submission deadline had passed,” Dicken writes.

See also: CCIIO posts health plan filing dates